Dusseldorf After high energy costs and ongoing supply chain problems, a third issue was at the fore on Friday: will the US Federal Reserve stall the economy with its increasingly aggressive policy of tightening? These issues weighed heavily on corporate profits.
Since prices are also slipping on the bond market, which are developing in the opposite direction to the yields, capital market expert Thomas Altmann from the investment house QC Partners is certain: “Everything that has an interest rate risk in any way flies out of the portfolio.”
Accordingly, the Dax recorded its biggest daily loss in six weeks this Friday and went 2.5 percent lower at 14,143 points from trading. Yesterday, Thursday, the leading index ended trading at 14,502 points, up almost one percent.
US Federal Reserve Chairman Jerome Powell had prepared investors for aggressive interest rate hikes on Thursday evening. A 0.5 percentage point hike in key interest rates at the upcoming meeting in early May “is definitely an option”. This speech had already caused significant price losses on the US stock exchanges.
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This announcement came as no surprise, as the market had long priced in 50 basis points more in May. What is new is that four double interest rate hikes, i.e. by 50 basis points each, are suddenly expected in the USA.
According to the Chicago derivatives exchange CBOE, a majority of professionals are now assuming an interest rate of between 3.0 and 3.25 percent. As recently as Tuesday of this week, this value was between 2.5 and 2.75 percent at the end of the year. It’s no wonder that US government bond yields are also rising significantly.
On Friday, this value for a bond with a ten-year term was again at 2.967 percent, close to a multi-year high. The yield on the two-year US government bonds, which react particularly sensitively to monetary policy, was now at 2.75 percent. In September last year, this figure was 0.212 percent.
Investor sentiment does not signal a crash
However, investors should not panic. If the sentiment analyzes are right, there shouldn’t be a new crash like in the period between the beginning of February and the beginning of March, when the Dax fell by more than 3000 points.
Behavioral economist Joachim Goldberg had already forecast profit-taking in the range between 14,500 and 14,550 points on Wednesday evening after evaluating the Frankfurt Stock Exchange survey among professionals and private investors, which “should represent a certain obstacle at least temporarily”. Although the Dax was even able to rise to 14,598 points yesterday, Thursday, sales started there.
Overall, Goldberg currently sees the Dax in a slightly better starting position for further price increases in the coming trading days, even if “the trees shouldn’t grow into the sky”.
Sentiment expert Stephan Heibel also said after evaluating the Handelsblatt survey Dax-Sentiment that extremely negative reports could cause a sell-off, but that should “only be short-lived”.
The outcome of the French elections at the weekend could pose a risk for the markets. Apparently, all stockbrokers are assuming a second presidency by Emmanuel Macron. A victory by Marine Le Pen should mean significant price losses for the markets.
Look at individual values
SAP: The software group could not convince investors with its quarterly figures. The share fell by more than five percent at times, then ended up trading down 2.1 percent. While the software giant boosted revenue on increased demand for its cloud offering, operating income fell on higher spending related to the Ukraine war, R&D investments, and marketing.
The price loss also weighs on the Dax, because SAP is the second heaviest Dax value with a market value of 116 billion euros. Only Linde is heavier at 153 billion.
There is a central support zone for SAP shares in the EUR 95 price range. If the prices here do not stabilize over the long term, the share is threatened with a multi-year downward trend.
That would be another mortgage for the Dax. In the year of the company’s 50th anniversary, the SAP share is miles away from its former favorite role for investors.
Team viewer: According to stockbrokers, the price losses at SAP are also pulling Teamviewer down. The shares of the software house lost almost six percent at the top to 12.09 euros and thus marked the lowest level since mid-March. The paper went 3.1 percent lower from trading.
Rheinmetall: The shares climbed in the MDax small-cap index by up to 3.3 percent to a record value of 225 euros. A stockbroker refers to a price target increase by UBS. The analysts of the major Swiss bank now see the papers of the Düsseldorf armaments group at 251 euros.
Since the beginning of the year, Rheinmetall stocks have already increased by 160 percent. At the end of the trading week, the paper was still up 0.2 percent.
Eagle groups: In a special investigation, the auditing firm KPMG was unable to refute all allegations made by the British short seller Fraser Perring against the real estate investor Adler Group. According to the Adler Group, the report relieves them of the accusation of systematic fraudulent transactions.
The news was initially well received on the stock exchange. At times, the price of the Adler share rose by 14.5 percent to EUR 13.29. However, the paper has lost around half of its value since June of last year. At that time, the paper was traded at 27.74 euros. At the end of trading, the stock was up 1.3 percent.
Two stocks traded at a dividend discount on Friday: Covestro and Schaeffler.
Covestro paid EUR 3.40, the closing price on Thursday was EUR 46.37. The dividend payment is also the main reason why the stock was listed significantly lower: It closed trading down 10.4 percent.
Schaeffler pays EUR 0.50, closing price on Thursday was EUR 6.00. The paper ended trading down 11 percent.
The technical Dax analysis
In the medium term: The downward trend in the Dax since the beginning of the year is intact. Only sustainable listings above 15,000 points should change something in this starting position. The leading index only just failed at this mark on March 29 with its daily high of 14,952 points. So far, the price gains are just a so-called bear market rally.
In the short term: From the beginning to the end of March, the Dax had a 2500-point rally. And the leading index is currently processing these gains. The lowest point of this short-term downward movement since the end of March is 13,887 points. Technical analysts call this a minimal correction, which is common after such a dynamic rally.
Here you can go to the page with the Dax course, here you can find the current tops & flops in the Dax.